The Washington, D.C.-based Small Business Survival Committee’s sixth annual ranking of states with respect to their climates for small business and entrepreneurship delivers to Rhode Island a sobering reminder. That is, while significant progress has been made in recent years, the state’s climate for small business has much room for improvement.
The SBSC’s “Small Business Survival Index 2001” combines 17 major government-imposed or government-related costs impacting small business and entrepreneurs across a wide range of industries.
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The costs factored into the group’s rankings include: personal income taxes; capital gains taxes; corporate income taxes, property taxes; sales taxes; death taxes; unemployment taxes, health insurance, electricity costs, and workers’ compensation costs.
So how did Rhode Island stack up?
Dead last.
Actually, Rhode Island finished 50 out of the 50 states, but the District of Columbia finished 51.
SBSC President Darrell McKigney said the annual survey is a good tool for states, a chance for them to gauge how they might be doing compared with the competition.
“In an increasingly mobile and competitive national economy, differences in government-imposed costs of doing business can make a huge difference between whether a state grows economically or falls behind,” he said.
Too often we have heard from economists who note Rhode Island’s tendency to lag behind when it comes to stimulating the economy. Perhaps the SBDC is on to something.
House Finance Chairman Antonio Pires (D-Pawtucket) said the state legislature has accomplished much in recent years with regard to making the state more business-friendly. Certainly, this year’s passage of a capital gains phase-out is a prime example.
But the state’s property taxes rank among the U.S.’s five highest, as does its unemployment tax rate of 9.81 percent.
Rhode Island’s 9 percent corporate tax rate also is among the country’s highest, according to the study.
Those numbers are hard to digest.
Representative Pires said the state has made strides toward improving its climate for small business. He also questions the timeliness of the data used by the SBSC. Gary Sasse, of the Rhode Island Public Expenditures Council, echoes that sentiment.
Sasse said he was not especially impressed by the SBSC survey, suggesting that “it was not balanced in all of the measures it used.”
We acknowledge the progress to which Pires and Sasse refer. The capital gains phase-out, a decrease in our personal income tax, and the gradual elimination of the inventory tax are all positive signs.
But dead last? Surely, we can do better than that.
